How Taylor Swift and U2 changed what music is worth

Last week, the grumpy godfather of Britrock, Noel Gallagher, told music website Vice that the music industry was "spinning out of control".

Gallagher has a point. In September, U2 inveigled its way into 500 million people's iTunes accounts with a free album that no one asked for, which was later described as "a fart" by Foo Fighters' drummer Taylor Hawkins. Five months earlier, the New York hip-hop collective Wu-Tang Clan announced plans to release one (yes one) album, based on the Renaissance model of priceless commissioned artworks. Wu-Tang expect the single copy of Once Upon a Time in Shaolin to sell for $US20 million. They have reportedly already received a $US5 million offer.

Hitting back: Taylor Swift pulled all her music off Spotify. Photo: Reuters

In between, Radiohead frontman Thom Yorke released his solo album Tomorrow's Modern Boxes using the peer-to-peer file-sharing protocol BitTorrent, charging just $6 an album, while American festival favourites Portugal. The Man announced an Australian tour with free tickets.

It is a time of great change in which musicians and labels are radically experimenting with cost.

Dime a dozen: There is seething debate over streaming services. Illustration: Simon Letch

Then there is the seething debate over streaming services, which are being lashed for providing pitifully low returns to artists. This week former Triple J Unearthed winner Abbie Cardwell released figures in a Facebook post detailing the dismal returns she received from streaming per 1000 plays of her songs. They ranged from "seemingly nothing" from major services Rdio and Deezer, to $11.05 from Google Play. Spotify paid $5.44. Xbox Music was the most generous with $53.33 – hardly enough for three days' groceries.

Many streaming services, including Spotify, provide access to new music for free in the hope customers will buy premium subscriptions. But critics argue the services should restrict new music to those premium services so more royalties can be paid back to artists and producers.

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Taylor Swift landed Spotify a body blow by pulling all her music off the service. She laid out her manifesto in The Wall Street Journal, writing: "Music is art, and art ... is valuable [and] should be paid for. My prediction is that individual artists and their labels will some day decide what an album's price point is. I hope they don't underestimate themselves or undervalue their art."

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Amid the debate, an old question re-emerges: what is art worth? A new album costs between $10 and $25. A song is between 69 cents and $2.19. A ticket to a live show for a well-known band usually costs between $50 and $150. But the events of the past year seem to show that these are arbitrary amounts.

As Gallagher put it: "It fascinates me, and infuriates me, that people are more willing to sit in a coffee shop and spend a tenner on two coffees and talk about the weather to their friends and that coffee will last 45 minutes. Yet they will physically get angry at you for asking them to buy an album for a tenner which will last a lifetime and might even tell you something about yourself."

Not all musicians see it that way. Iggy Pop, 67, laughs at musicians' presumptions: "I don't worry too much about how much I get paid for any given thing because I never expected much in the first place and the whole industry has become bloated in its expectations," he said during his BBC John Peel lecture last month. "If you're an entertainer, your god is the public. They'll take care of you somehow."

If that sounds like a blind act of faith, it is not a new one. The difference is that where once the gamble was taken with record labels, it is now being taken directly with the public.

"A lot of bands are coming around to that," says James Lyell of Flight Facilities, whose debut album reached No. 3 on last week's ARIA chart. "Big labels are losing steam because people are able to generate their own money from the internet."

Publishing deals – struck when a song is picked for an advertisement or soundtrack – are a growing source of revenue. There are also corporate sponsorships: Portugal. The Man, touring Australia, could charge about $50 a ticket, but the gigs are free because Corona is paying them to play.

Portugal. The Man's John Gourley believes the public's reluctance to pay for music is partly a response to the "excesses" the industry has used to market its music.

"A lot of people have seen the rock'n'roll lifestyle played out – they've heard the Led Zeppelin and Motley Crue stories, they've seen hip-hop artists with [Cadillac] Escalades and Bentleys in their videos. But those guys didn't own Bentleys, they were returned after the shoots.

"People got it in their heads there's so much money in music that we don't need to pay for it, we don't need to support it. But everything costs something."

There are plenty of ideas on how to react to the way technology and consumer behaviour have altered music's value. Perhaps artists themselves must assume a new value; instead of paying for a song or album, we pay for a sense of connection with an act – watching their gig, wearing their artwork on a T-shirt. Fans might pay to have One Direction follow them back on Twitter, or to receive exclusive content.

"People will place whatever value they want on [music]," says Hugo Gruzman of Flight Facilities. "If they want to find it for free, it doesn't take much ... it's fine with us. Most of all we want pairs of ears listening to us."

The only certainty is that there is no certainty when it comes to the value of music or the mode of compensation.

"You can't exist in an industry and expect it's going to be the same forever," Gruzman says. "The party is over in terms of an expectation of day-to-day sales."

Says Lyell: "I had a friend tell me two years ago that a song now is just a business card for a gig. More and more, I think he's right."